Robert A. Bonavito, CPA PC

Understanding Hidden Assets in Divorce Cases

When we're hired in matrimonial cases one of the primary reasons we're hired is to search for hidden assets. There's lots of schemes that people use to hide assets. We find 'em in overseas bank accounts. We find 'em in companies. We find 'em sometimes in safety deposit box as gold bullion, but lately, we've been finding a lot hidden at the Internal Revenue Service. Yes. A lot of monied spouses are hiding money at the Internal Revenue Service.

How do you hide money at the Internal Revenue Service when you're getting divorced? What they do and what we found out is they're going to the personnel departments and asking them to increase the federal and state withholding on their paychecks. So, if they go in and they'll say, "Listen I want you to increase by federal withholding by $800 a week and I want you to increase my state withholding by 200." That's $1,000. And what that does is it reduces the net check they're getting. So, if they get divorced and someone's looking at the net check and not really looking at the gross, what that means is they're going to be missing about $52,000 worth of income. So, that's one place where they hide it at the IRS because when they file the return at the end of the year or after the divorce, what happens? They get that refund back.

The second way they're hiding money at the IRS is through refunds. And what happens is, let's say a couple is getting divorced and they have a $15,000 refund. The monied spouse would do the tax return. Instead of taking the $15,000 they'll apply it to the following year or the next year. And once the divorce is over, they will then take that $15,000.

So, what happened? The IRS held that money until after the divorce was done. And if you didn't hire someone, you didn't take a really good look at the tax returns, a lot of times this is missed and this is something that has been relatively new within the last three or four years that when we're going in, not only are we looking overseas. We're looking at corporations. We're looking at where they could stash money in safety deposit boxes and trusts and stuff like that, sometimes with family members. But the big one is hiding it with the Internal Revenue Service.

If you have any questions on this, feel free to give me an email.

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